Question

Part A. Identify the following users of accounting information as either an internal (I) or an external (E) user.

______ 1. Shareholders
______ 2. Creditors
______ 3. Nonexecutive employee
______ 4. Research and development director
______ 5. Purchasing manager
______ 6. Human resources director
______ 7. Production supervisors
______ 8. Distribution managers
Part B. Identify the following questions as most likely to be asked by an internal (I) or an external (E) user of accounting information.
______ 1. What are the costs of our service to customers?
______ 2. Should we make a five-year loan to that business?
______ 3. Should we spend further research on our product?
______ 4. Do income levels justify the current stock price?
______ 5. What are reasonable payroll benefits and wages?
______ 6. Which firm reports the highest sales and income?
______ 7. What are the costs of our productâs ingredients?

Answer 1

Part A

1. Shareholders

Identification: External user

2. Creditors

Identification: External user

3. Non-executive employee

Identification: External user

4. Research and development director

Identification: Internal user

5. Purchasing manager

Identification: Internal user

6. Human resources director

Identification: Internal user

7. Production supervisors

Identification: Internal user

8. Distribution managers

Identification: Internal user

Part B

1. What are the costs of our service to customers?

Identification: Internal user

2. Should we make a five-year loan to that business?

Identification: External user

3. Should we spend further research on our product?

Identification: Internal user

4. Do income levels justify the current stock price?

Identification: External user

5. What are reasonable payroll benefits and wages?

Identification: Internal user

6. Which firm reports the highest sales and income?

Identification: External user

7. What are the costs of our productâs ingredients?

Identification: Internal user